📉ETF Expense Ratio Impact Calculator

Compare long-term return loss from ETF expense ratio differences

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Why ETF Expense Ratios Matter for Long-Term Returns

ETF expense ratios are annual fees charged as a percentage of assets. While a 0.5% difference seems small, compounded over decades it can erode a substantial portion of your returns. If two ETFs track the same index, the lower-cost fund will consistently outperform over the long run. This calculator shows exactly how much that difference amounts to in dollar terms.

For example, investing $100,000 at 7% gross return over 20 years — an ETF charging 0.03% grows to about $383,000, while one charging 0.5% reaches only $350,000. The $33,000 gap is pure cost drag from a seemingly small annual fee difference.

Frequently Asked Questions

How significant is a 0.3% annual fee difference?

Over 20 years, a 0.3% annual expense ratio gap can reduce your final portfolio value by 5–8% due to compounding. Always choose the lowest-cost fund when tracking the same index.

What else should I check besides expense ratios?

Evaluate tracking error, bid-ask spreads, fund size (AUM), and liquidity. A slightly pricier fund with much tighter index tracking may deliver better net performance than a cheaper alternative with high tracking error.